Senate Senate Committee on Commerce, Labor and Energy-May
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MINUTES OF THE SENATE COMMITTEE ON COMMERCE, LABOR AND ENERGY Seventy-ninth Session May 26, 2017 The Senate Committee on Commerce, Labor and Energy was called to order by Chair Kelvin Atkinson at 8:34 a.m. on Friday, May 26, 2017, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to Room 4412E of the Grant Sawyer State Office Building, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file in the Research Library of the Legislative Counsel Bureau. COMMITTEE MEMBERS PRESENT: Senator Kelvin Atkinson, Chair Senator Pat Spearman, Vice Chair Senator Nicole J. Cannizzaro Senator Yvanna D. Cancela Senator Joseph P. Hardy Senator James A. Settelmeyer Senator Heidi S. Gansert GUEST LEGISLATORS PRESENT: Assemblyman Chris Brooks, Assembly District No. 10 STAFF MEMBERS PRESENT: Marji Paslov Thomas, Policy Analyst Bryan Fernley, Counsel Lynn Hendricks, Committee Secretary OTHERS PRESENT: Robert G. Johnston, Western Resource Advocates Dylan Sullivan, Natural Resources Defense Council Ernie Adler, International Brotherhood of Electrical Workers Local 1245 Tom Polikalas Joe Greco, Senior Vice President, Terra-Gen Operating Company, LLC Senate Committee on Commerce, Labor and Energy May 26, 2017 Page 2 Leonard B. Jackson, Director, Faith Organizing Alliance; Associate Minister, First African Methodist Episcopal Church Jennifer Taylor, Clean Energy Project Adam Green, Director of Development, SolarReserve Linda Bullen, Eolus North America, Inc. Rhonda Mills, Geothermal Energy Association Judy Treichel, Executive Director, Nevada Nuclear Waste Task Force Louise Helton, 1 Sun Solar Electric, LLC Linda Nerstad Rose McKinney-James, Bombard Electric, LLC; Valley Electric Association, Inc. Richard Perkins, MGM Resorts International Matthew DeFalco Steven Horner Dane Grover Jesse Wadhams, Recurrent Energy, LLC Jane Grossman Mike Kelly, Chair, Nevada Democratic Veterans and Military Families Caucus Juan Robledo, Chispa Nevada Josh Hicks, First Solar Jessica Ferrato, Solar Energy Industries Association Kyle Davis, Interwest Energy Alliance Elspeth Dimarzio Cordua, Sierra Club Larry Fosgate, Clean Energy Project Linda Saunders Natalie Hernandez, Battle Born Progress Andy Maggi, Executive Director, Nevada Conservation League Lynn Lanier, Nevada Conservation League Demi Falcon, Nevada Conservation League Jessica Scott, Vote Solar Jackie Stroud Brian Beffort, Director, Toiyabe Chapter Sierra Club Ken Evans, Uplift Foundation of Nevada Virginia Valentine, President, Nevada Resort Association Eric Dominguez, Caesars Entertainment Erik Hansen, Wynn Resorts Judy Stokey, NV Energy Alfredo Alonso, Ormat Technologies Senate Committee on Commerce, Labor and Energy May 26, 2017 Page 3 CHAIR ATKINSON: I will open the hearing on Assembly Bill (A.B.) 206. ASSEMBLY BILL 206 (1st Reprint): Revises provisions relating to the renewable portfolio standard. (BDR 58-746) ASSEMBLYMAN CHRIS BROOKS (Assembly District No. 10): I am here to discuss A.B. 206, which boosts Nevada's current renewable portfolio standard (RPS), replacing the current benchmark for the State of 25 percent by 2025 with the goal of 50 percent by 2030. I have written testimony (Exhibit C) giving a brief overview of the need for this bill and its effect on Nevada's economy and environment. Nevada's RPS requires an electric utility or other provider of electric service to generate or acquire renewable energy or save electricity in an amount that is not less than a specified percentage of the total amount of electricity sold by the utility to its retail customers during a calendar year. It was first introduced in 1997 with A.B. No. 366 of the 69th Session, which provided for 0.2 percent increments of solar energy to be included in the energy portfolio as part of utility restructuring. In 2001, the current format for aggressive RPS targets was outlined in A.B. No. 418 of the 71st Session and S.B. No. 372 of the 71st Session. This was revised in 2005 with A.B. No. 385 of the 73rd Session, and again in 2007 with S.B. No. 437 of the 74th Session. In 2009, the RPS was increased by A.B. No. 387 of the 75th Session, which also raised the solar carveout, requiring utilities to meet 6 percent of their portfolio requirement through solar energy. Assembly Bill 206 revises the RPS for calendar year 2018 and each calendar year thereafter so that by calendar year 2030 and each year thereafter, each provider of electric service in the State will be required to generate, acquire or save electricity from renewable energy systems, efficiency measures or energy storage systems by a measure not less than 50 percent of the total amount of electricity sold by the provider to its retail customers during that calendar year. As noted on page 2 of Exhibit C, clean energy is the best jobs multiplier of any industry listed. For every clean energy job, there is a 3.12 job multiplier in Nevada. That is the highest job multiplier of any of the industry sectors identified by the Governor's Office of Economic Development (GOED). The GOED indicates Nevada has room to grow. According to the GOED study, we Senate Committee on Commerce, Labor and Energy May 26, 2017 Page 4 are 20 percent below where the Governor's Office feels we should be in clean energy jobs. With regard to the Energy Choice Initiative, one of the main topics I heard discussed when I was advocating on behalf of this bill is the uncertainty associated with the Energy Choice Initiative and how it might affect the RPS. Let me quote from the language of the Energy Choice Initiative itself. In section 1, subsection 3, paragraph (c), it says: Nothing herein shall be construed to invalidate Nevada's public policies on renewable energy, energy efficiency and environmental protection or limit the Legislature's ability to impose such policies on participants in a competitive electricity market. This makes it clear that the RPS was contemplated when the Energy Choice Initiative was proposed to the Nevada voters, and the Nevada voters overwhelmingly voted for it. In October 12, 2016, the Energy Choice Initiative and Clean Energy Project joined with Switch, Sands and MGM Resorts on a press release stating that one of the new principles the Energy Choice Initiative outlines is renewable energy. The press release further stated that Nevada should set a new long-term goal for achieving at least 80 percent clean energy by 2040 with interim milestones to steadily move toward cleaner energy. That is what we are trying to do with A.B. 206. The issues of energy choice and an increased RPS are completely compatible. When you look at the arguments for and against the Energy Choice Initiative in the sample ballot, the argument for the Energy Choice Initiative says, "A yes vote on Question 3 means you support … keeping Nevada's renewable energy portfolio standards in place, along with Nevada's other renewable policies." That was what the voters read when they went to the polls. With regard to the popular support, in a poll from 2017, 84 percent of Nevadans supported an increase in the RPS. We have received several letters of support for A.B. 206, including letters from the Geothermal Energy Association, the large Solar Energy Industries Association, Levi Strauss, and many other businesses across Nevada. Senate Committee on Commerce, Labor and Energy May 26, 2017 Page 5 ROBERT G. JOHNSTON (Western Resource Advocates): I have a presentation (Exhibit D) regarding this bill. This presentation is quite lengthy, so I will just briefly touch on some of the highlights. One of the benefits we expect from A.B. 206 is that it will diversify our energy supply portfolio. Page 12 of Exhibit D shows NV Energy's projected fuel mix under the current RPS. These numbers come from NV Energy's integrated resource plans filed in 2016. As you can see, we are currently at about 13.5 percent renewable. By 2030, we would be at 25.1 percent renewable and 63.9 percent natural gas. We are heavily dependent on natural gas generation now, and under current planning, we would still be very dependent on natural gas for power generation in 2030. Page 13 of Exhibit D shows the estimated impact of going to 50 percent renewable by 2030. Under that standard, this bill would take us to 47.5 percent renewable and 41.5 percent natural gas. The change would not be abrupt, just a steady sustained transition away from reliance on natural gas and toward a greater reliance on renewable sources. Page 15 of Exhibit D speaks to natural gas price volatility. The chart on this page is a 20-year history of natural gas prices from the U.S. Energy Information Administration (EIA). For the period from 1996 to 2016, the high price was $13.42 per million British thermal units (BTU) in October 2005, and the low was $1.73 per million BTUs in March 2016. In January 2017, the price was $3.30 per million BTUs; it has dropped since then. Page 16 of Exhibit D shows the impact of that on electricity rates. This is looking at the fuel costs only for natural gas-fired generation. When natural gas is $3, it costs about $22.50 per megawatt-hour (MWh). When natural gas is $6, the cost jumps up to $45 per MWh. The greatest risk Nevada ratepayers face today is the future trajectory of natural gas prices. We see A.B. 206 as reducing our carbon emissions and thereby reducing our exposure to carbon price risk. In the chart on page 18 of Exhibit D, the dark red line shows projected emissions under current planning to comply with current RPS, and the lighter red line shows the projected emissions under A.B.